Court tosses hospital’s challenge to NLRB Health Care Rule

The D.C. Circuit recently criticized a hospital’s challenge to a rule that the National Labor Relations Board (NLRB) promulgated more than two decades ago.

In 1989, the NLRB created the Health Care Rule to limit the number and types of bargaining units that are allowed in acute-care facilities. “The whole idea was to avoid proliferation of bargaining units on the grounds that if there were too many small units within a hospital, it could lead to more labor disputes, strikes and work interruptions—and thereby hurt patients,” says Bernard Jeweler, a shareholder at Ogletree Deakins and former assistant general counsel at the NLRB.

In the rule, which the Supreme Court upheld in 1991, the board outlined eight possible appropriate bargaining units: all registered nurses; all physicians; all professionals except for registered nurses and physicians; all technical employees; all skilled maintenance employees; all business office clerical employees; all guards; and all nonprofessional employees except for technical employees, skilled maintenance employees, business office clerical employees and guards. The rule noted that combinations of these units could be appropriate if a labor organization sought them.

In 2007, the National Union of Hospital and Healthcare Employees petitioned for an election at San Miguel Hospital Corp., an acute-care facility in Las Vegas, N.M. The election concerned the formation of a bargaining unit comprising all on-site professionals and nonprofessionals, excluding the guards.

“That’s a big unit,” says Denise Keyser, a partner at Ballard Spahr. “The hospital was probably not that happy with that. If a unit includes just the nurses or the other professionals, there aren’t as many limitations on the employer’s discretion. The hospital was facing a situation where it really wouldn’t have been able to make any changes to terms and conditions of employment anywhere until it dealt with this union.”

San Miguel objected to the unit. But more importantly, it claimed the Health Care Rule violated a provision of the National Labor Relations Act (NLRA) that prohibits the board from using “the extent to which the employees have organized” as the controlling factor in determining a unit.

Nonetheless, the board’s regional director found the proposed unit to be appropriate and approved an election. The union prevailed. San Miguel filed 24 objections to the election and refused to bargain with the union. The NLRB issued an order holding that San Miguel had violated the NLRA, and the case moved on to the D.C. Circuit for review. On Nov. 2, 2012, in San Miguel Hospital Corp. v. National Labor Relations Board, the court threw out the hospital’s challenge.

Harsh Words

The D.C. Circuit wasn’t gentle in tossing San Miguel’s case. In the opinion, Judge Laurence Silberman wrote that the court saw “zero merit” to the hospital’s argument that the Health Care Rule violated the NLRA. He said that although the NLRA stipulates that the extent of employees’ organization cannot be the controlling factor in determining a unit, “consideration of that factor among others is entirely appropriate.”

Silberman wrote that although the hospital had “unleashed a blizzard of arguments to challenge the Board’s unfair-labor-practice orders,” it “might be appropriate to suggest that in appellate argument, the proverbial rifle is preferable to a machine gun—but that would assume petitioner had at least a few good arguments; it did not. In truth, it appears to us that all the Hospital sought was the inevitable delay that review of Board orders affords.”

The court stopped just short of calling the appeal frivolous, Jeweler says. “There are board cases over the years in which the courts have been so aggravated ... that they’ve slapped the private counsel with attorneys’ fees awards in favor of the board,” he adds. “The court didn’t do that here, but you can see that it looks like they were thinking about it.”

Think Twice

Experts say there are several lessons that counsel can take away from San Miguel.

“In-house counsel need to look closely to make sure their argument isn’t going to turn the court against the client,” Jeweler says. “I would never want to be in a position where I’ve advised my client to litigate something to the point where the court ridicules it.”

Another takeaway stems from the fact that San Miguel waited until the D.C. Circuit heard the case to argue that the proposed bargaining unit was inappropriate because there was no community of interest within the group. The court said San Miguel needed to raise this issue in the initial representation hearing in order for the board to rule on it. The court wrote that the proposition “that the employer must challenge a proposed unit on community-of-interest grounds before the Board is required to rule on the issue” is “painfully obvious,” making a remand unnecessary. The lesson here is to “make sure you join all of the issues that you possibly want to litigate at the initial stages of the case,” says Jackson Lewis Partner Jeffrey Corradino.

Overall, experts say that San Miguel reminds in-house counsel at acute-care facilities that even though the Health Care Rule outlines eight specific appropriate bargaining units, the board may allow any combination of those. “You need to be prepared for the possibility that the union may not just target one specific group,” says Corradino.

Corradino suggests counsel at acute-care facilities try to structure their organization so that employees don’t want or need union representation. Counsel should partner with human resources and ask themselves whether their organizations are paying competitively and listening to employees’ legitimate concerns. “Then there really is no need to have a third-party organization come in and muck up the works,” he says.